Numerous approaches and business programs have been proposed and employed to track customer purchasing habits with the ultimate aim of tailoring marketing to more profitable customers in order to increase profit margins. One particular approach uses a remote central data warehouse to track customer purchasing habits. When a customer completes a purchase, information, e.g. customer identity and customer purchases, is sent to the central data warehouse for analysis. After the data stored in the data warehouse is analyzed, a reward (often in the form of a coupon or rebate) or balance statement is sent to the customer. The data warehouse is in certain instances used in combination with customer loyalty cards to identify customers and allow retailers to track customer purchasing habits on an individual basis. A typical loyalty card system employs plastic cards having a back side with either a bar code or magnetic stripe for uniquely identifying the individual cardholder. Because the central data warehouses store all customer purchasing information, the data warehouses must be quite large.
Another problem encountered with these prior art approaches is a time delay resulting from transfer of purchase information to the remote warehouses, analysis of the information at the remote warehouses, and transfer of results or feedback to the customer. Because processing of customer purchases and determination of rewards occurs at a distant location from the transaction and as part of much larger database processing, the customer does not get immediate positive feedback. As a result, customer encouragement to make more profitable purchases frequently fails and the incentive for the customer to participate in the program wanes. As the number of participants in the program grows, there is likely to be a corresponding increase in the time delay between a customer's purchase and receipt of the purchase-related reward.
Another approach uses a smart card as a customer loyalty card. The smart card, with its own processor and memory, acts as a customer identifier and as a repository for customer purchasing information. Customer purchasing information typically consists of a point total value determined by the centralized processing. In one prior art system, points awarded based on the recency, frequency, and monetary value of the customer's purchases are stored in memory on the card and at a central data warehouse. However, due to the use of remote data warehousing and analysis, this approach still entails a large delay between the time of purchase and the awarding of points. Because all the data are stored at the central data warehouse, as well as on the smart cards, there is no reduction in the size of the required data warehouse.
Each of the above approaches, (1) using a bar code or magnetic stripe card and (2) using a smart card, requires a large database for the data warehouse and entails an undesirable delay in providing feedback or rewards to the customer.
Another problem with previous approaches is protection of private customer-related data. It is becoming increasingly more important to customers that information pertaining to their purchasing habits be held in private and controlled by the customer. In the prior approaches, the information is all sent to the central data warehouse for processing and possible analysis of customer habits. Thus, the information on the card is replicated at at least one other location out of control of the customer.